Westpac’s Asian adventure

Westpac's Asian adventure

Slow credit growth at home has Westpac eying an Asian expansion

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published February 4, 2013 1:59 pm AEDT

Westpac Banking Corporation (ASX: WBC) may be following Australia and New Zealand Banking Group's (ASX: ANZ) lead and moving further into Asia.

Westpac surprised the market with a $400 million bid for a stake in Hong Kong's Bank of East Asia in December. Unfortunately for Westpac, it was outbid by a higher offer from one of Japan's financial giants, Sumitomo Mitsui.

According to the Australian Financial Review (AFR), Westpac was looking for a long-term strategic holding in the business, but this move came as a surprise, as Westpac has traditionally been more domestically focused than the other banks. The majority of its $6.6 billion in profit last year came from Australia and New Zealand.

With domestic growth slow and slowing even further, Australia's banks have been looking for other alternatives to grow their earnings. With fast-growing economies, a rising middle class and large savings, Asia is proving too attractive for our banks to ignore.

ANZ Bank has been expanding into Asia for a few years now, and has operations in 14 Asian countries, while the Commonwealth Bank (ASX: CBA) operates in seven, National Australia Bank (ASX: NAB) in six and Westpac currently in five countries. ANZ has repeatedly stated that it is aiming to derive between 25-30% of group profits outside of Australia and New Zealand by 2017.

Westpac is due to open a branch in India later this month, joining the other three majors who already have a presence there.

Foolish takeaway

Westpac investors will be hoping that its 'Asian' strategy has more success than NAB's forays into international markets. NAB's UK expansion has been deemed a disaster and follows on from its dismal US experience, where it was forced to incur write-downs of more than $3 billion in 2001.

In the market for high yielding ASX shares? Get three "Rock-Solid Dividend Stocks" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.